WP Engine should consider challenging the Wordpress Foundation's 501(c)(3) status by filing a complaint with the IRS. IANAL but I have run nonprofits, and they must be very careful about how it interacts with a for profit entity, especially when they share staff.
That seems like it would be terrible for the open source project and anyone that relies on it. I hope both sides of this dispute deescalate things before something like that happens.
Maybe not. A stern letter from the IRS might be just the nudge for the Foundation to clarify things, and maybe push Matt to choose one or the other. Few things will scare a nonprofit more than the IRS knocking on the door.